Search

CALGARY, Nov. 28, 2011 /CNW/ - ArPetrol Ltd. ("ArPetrol" or the
"Company") (TSX-V: RPT) is pleased to announce the highlights of its
unaudited interim financial and operating results for the three-and
nine-month periods ended September 30, 2011 and to provide an
operational update on activities this year to date as well as an
outlook for the remainder of the year. The complete quarterly reporting
package for the Company, including the unaudited interim condensed
consolidated financial statements and associated management's
discussion and analysis, have been filed on SEDAR at www.sedar.com and posted on the Company's website at www.arpetrol.com.

All dollar amounts stated are in Canadian currency.

Third Quarter 2011 Highlights

Operating and Financial

The Company remains well financed with $37 million of working capital as
at September 30, 2011 and no long-term debt. This working capital will
fund our operations through to the end of 2012. We also continue to
look to expand our asset base in the Austral and Neuquén basins.

During the third quarter of 2011, the Company's production through its
Argentine subsidiary averaged 309 barrels of oil equivalent (boe) per
day. This is an increase of 21 boe per day over the second quarter of
2011 and came after the successful resolution of processing
interruptions. Third-quarter volumes were down year-on-year from 413
boe per day for the third-quarter of 2010 due to natural declines.

The Company continues to realize higher prices for its production over
prior periods. For the third quarter of 2011 the average price
received for its natural gas was $2.19 per thousand cubic feet (Mcf),
significantly higher than the $1.61 per Mcf received in the
third-quarter of 2010. This increase is due to the Company receiving
Gas Plus incentive program approval in August of 2010, thereby avoiding
redirection of its production to the lower priced residential market.
Third-quarter 2011 natural gas prices were lower than the prior quarter
when we received $2.47 per Mcf. This variance in price is part of the
yearly cycle of pricing in Argentina.

For the third-quarter of 2011 the Company received on average $65.45 per
barrel for its natural gas liquids, 11% higher than the $59.08 per
barrel received in the second-quarter of 2011 and 132% higher than the
$28.22 per barrel received in the third-quarter of 2010. This rise in
the realized price of natural gas liquids reflects both an increase in
the general market price and a change to the Company's marketing
strategy in late 2010.

Processing revenue in the third-quarter of 2011 was $350,712 compared to
$408,468 for the second quarter and $532,856 for the third quarter of
2010. Processing revenue to date in 2011 continues to be affected by
the September 2010 disruption at the third-party facility which ships
gas to the Company's gas plant for processing. The disruption was
partially rectified in January 2011 but is not expected to be fully
resolved until December 2011. The Company realizes part of its
processing revenue through the sale of natural gas liquids and the
increase in the liquids price helps offset some of the effect of
reduced third-party volumes.

Operating costs for the third-quarter of 2011 were $843,509 compared to
$952,644 for the second-quarter and $608,157 for the third-quarter of
2010. Operating costs in Argentina are affected by the country's
general inflation rate of 20-25 percent annually. Along with the
inflation rate, operating costs in 2011 increased due to compressor
repairs and higher camp costs.

The production, price, processing and operating factors mentioned above
resulted in field netbacks in the third-quarter of 2011 of negative
$88,345 compared to netbacks of negative $134,172 in the second-quarter
and positive $263,203 in the third-quarter of 2010. (Field netback is
a non-IFRS measure -see the advisory under "Non-IFRS Measures" at the
end of this news release.)

Summary of Results

Q3 2011

Q2 2011

Q3 2010

Financial (Cdn$ except shares outstanding and per boe1 amounts)

Production sales

490,409

493,307

417,152

Processing revenues

350,712

408,468

532,856

Funds flow from operations 1

(1,099,790)

(1,146,074)

(321,763)

Cash generated from operating activities

(1,338,856)

(2,418,256)

(34,156)

Net loss and comprehensive loss

759,316

1,628,475

3,882,391

Capital expenditures

386,061

407,254

114,388

Weighted average shares outstanding (millions)

- basic and diluted

572.5

572.2

204.4

Operations

Production

Natural gas - Mcf per day

1,710

1,572

2,302

Natural gas liquids - bbls per day

24

26

30

Total - boe per day 1

309

288

413

Average sales price

Natural gas - $ per Mcf

2.19

2.47

1.61

Natural gas liquids - $ per bbl

65.45

59.08

28.22

Average operating netback

Production - $ per boe 1

5.16

4.63

2.90

Processing - $ per Mcf processed 1

(0.12)

(0.10)

0.03

Note:1. See advisories at the end of this news release with respect to
non-IFRS measures and BOE presentations.

Operational Update and Outlook

The Company has initiated a two well redevelopment drilling program on
its 100% owned Faro Virgenes Concession and plans to spud the first
well under this program in Q1 2012. Each well is expected to take 45
days to drill and is expected to have an initial production rate in
excess of 6 MMcf per day.

The Company expects the disruption at the third-party facility which
ships gas to the Company's gas plant to be resolved in December 2011.
This should allow the delivery of third-party gas for processing at the
Company's gas plant to return to the previous throughput of
approximately 76 MMcf per day versus the average processing through-put
of 22 MMcf per day for the third-quarter of 2011.

The Company commenced its exploration program on its operated lands on
the Blanco de Los Olivos Oriental ("BOO") and Catriel Viejo Sur ("CVS") permits in the Rio Negro province of the Neuquén Basin in Argentina.
The Company has just completed the drilling of its first well in its
three to four well program. The well had gas shows, but the zones were
deemed to be non-commercial, and the Company and its partner have
decided to plug and abandon the well.

In addition to the conventional targets, ArPetrol will also evaluate
shale oil potential by taking a core sample and by completing a full
log evaluation of the lower Vaca Muerta zone on its 55km2 CVS permit, which is located approximately 60 km northeast of the
Yacimientos Petrolíferos Fiscales (YPF) shale oil well drilled in the
Loma La Lata field.

The Company has a 20% operated working-interest in the BOO and CVS
permits, which can be increased to a 50% working interest by paying
back costs following drilling of the first well on each block.

In respect of the foregoing operational plans, as of September 30, 2011
ArPetrol had approximately $37 million of working capital available to
fund its work programs through the end of 2012. Capital expenditures
for 2011 are estimated at $5.4 million, depending on the results from
the exploration wells to be drilled in the fourth quarter. The 2012
capital budget has been approved at $25 million to cover the
redevelopment program. The Company is targeting an exit rate for 2012
production in the range of 2500 to 3000 boe per day, depending on the
results of the drilling program.

In October Presidential elections were held in Argentina and the
incumbent President was re-elected. Following the election a change in
legislation was made that requires oil, gas and mining exporters to
repatriate export revenues to Argentina. As the Company's business
model has always assumed only internal markets for oil and gas
production, this change is not considered material to the Company.
ArPetrol continues to believe that market pricing for oil and gas will
steadily increase in Argentina as subsidies are removed and market
forces prevail.

Business Development

The Company believes that Argentina offers a wide range of growth
opportunities. A number of alternatives are under evaluation which
would be complementary to the current portfolio of assets. Management
continues to be approached by companies attracted by ArPetrol's
experienced management and Board of Directors as well as its strong
balance sheet. While Argentina is its prime area of interest, the
Company may pursue acquisitions in other Latin American regions on an
opportunistic basis.

About ArPetrol Ltd.

The Company is a Calgary-based publicly traded company currently engaged
in oil and natural gas exploration, development and production and
third-party natural gas processing in Argentina where it also owns and
operates a gas processing facility with capacity of 85 million cubic
feet (MMcf) per day.

The Company is the resulting entity from the business combination of the
Company (formerly RPT Resources Ltd. ("RPT") and ArPetrol Inc. (now
ArPetrol Holdings Inc., a wholly owned subsidiary of the Company)
completed in the first quarter of 2011. This business combination is
described further in the Company's interim condensed consolidated
financial statements as at and for the period ended September 30, 2011.
The Company's Common Shares are listed on the TSX Venture Exchange
under the symbol "RPT".

Non-IFRS Measures

This news release includes references to financial measures commonly
used in the oil and natural gas industry. The terms "field netback"
(production and processing revenue less royalties, turnover taxes and
operating expenses)and "funds flow from operations" (cash generated from operating
activities before changes in refundable Argentinean tax, non-cash
working capital, and translation adjustment on operating items) do not
have any standardized meaning under International Financial Reporting
Standards ("IFRS") and may not be comparable with similar measures
presented by other companies. Funds flow from operations should not be
considered an alternative to, or more meaningful than, cash generated
from operating activities, net income (loss) or other measures
determined in accordance with IFRS, as an indicator of the Company's
performance.

See the management's discussion and analysis for the three and nine
months ended September 30, 2011, filed on SEDAR at www.sedar.com and on the Company's website, for further discussion, including a
reconciliation of funds flow from operations to cash generated from
operating activities which is the most directly comparable measure
calculated in accordance with IFRS. There is no IFRS measure that is
reasonably comparable to field netbacks and a detailed calculation of
such netbacks is presented in the "Results of Operations" section.

BOE Presentation

Production information is commonly reported in units of barrels of oil
equivalent (boe). For purposes of computing such units, natural gas is
converted to equivalent barrels of oil using a conversion factor of six
thousand cubic feet (mcf) to one barrel (bbl). This conversion ratio of
6:1 represents energy equivalency, which is primarily applicable at the
burner tip, and does not represent a value equivalency at the wellhead.
Such disclosure of boe may be misleading, particularly if used in
isolation.

Forward-Looking Information

This news release contains certain forward‐looking statements relating,
but not limited, to operational information, targeted production rates,
anticipated processing volumes, expected capital expenditures, drilling
plans and the timing associated therewith. Forward‐looking information
typically contains statements with words such as "anticipate",
"target", "estimate", "expect", "potential", "could", "should", or
similar words suggesting future outcomes. The Company cautions readers
and prospective investors in the Company's securities not to place
undue reliance on forward‐looking information as, by its nature, it is
based on current expectations regarding future events that involve a
number of assumptions, inherent risks and uncertainties, which could
cause actual results to differ materially from those anticipated by the
Company.

Forward-looking information is based on management's current
expectations and assumptions regarding, among other things, plans for
and results of future transactions, the resolution of disruptions at
the third party facility that ships gas to the Company's plant and the
expected increase in throughput and processing revenues, future
drilling activity and production rates, future capital and other
expenditures (including the amount, nature, timing and sources of
funding thereof), future production and processing revenue, future
economic conditions, future currency and exchange rates, continued
political stability in the areas in which the Company is operating,
receipt of necessary government approvals in a timely fashion and the
Company's continued ability to obtain and retain qualified staff and
equipment in a timely and cost-efficient manner. Although the Company
believes the expectations and assumptions reflected in such
forward‐looking information are reasonable, they may prove to be
incorrect.

Forward‐looking information involves significant known and unknown risks
and uncertainties. A number of factors could cause actual results to
differ materially from those anticipated by the Company, including but
not limited to risks associated with the oil and natural gas industry
(e.g., operational risks in exploration and drilling; inherent
uncertainties in interpreting geological data; changes in plans with
respect to exploration or capital expenditures; the uncertainty of
estimates and projections in relation to costs and expenses; and
health, safety and environmental risks), weather delays and natural
disasters, processing interruptions and natural declines, disruptions
at third party facilities, union activities, the risk of commodity
price and foreign exchange rate fluctuations, the risk of changes in
legislation and fiscal regimes, the uncertainty associated with
negotiating with third parties (including governments) in countries
other than Canada and other risks associated with international
activity.

In addition, statements relating to "reserves" contained from time to
time in the Company's continuous disclosure documents including some of
its press releases are deemed to be forward-looking statements, as they
involve the implied assessment, based on certain estimates and
assumptions which are subject to change, that the resources described
can be economically produced in the future. In respect of the estimate
of prospective resources, there is no certainty that any portion of the
resource will be discovered. If discovered, there is no certainty that
it will be commercially viable to produce any portion of the
resources. Terms related to reserve classifications referred to herein
are based on the definitions and guidelines in the Canadian Oil and Gas
Evaluation Handbook. The Company's information circular, filed on SEDAR
at www.sedar.com and dated February 14, 2011, contains detail with respect to the
Company's reserves estimates and the independent report prepared by
Gaffney, Cline & Associates dated February 7, 2011 and effective
December 31, 2010, auditing the reserves attributable to the principal
properties of the Company in Argentina.

The forward‐looking information included herein is expressly qualified
in its entirety by this cautionary statement. The forward‐looking
information included herein is made as of the date hereof and the
Company assumes no obligation to update or revise any forward‐looking
information to reflect new events or circumstances, except as required
by law.

Additional information relating to the Company is also available on
SEDAR at www.sedar.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider
(as defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.